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Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects

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  • Günther, Claudia
  • Schill, Wolf-Peter
  • Zerrahn, Alexander

Abstract

We analyze how tariff design incentivizes households to invest in residential photovoltaic and battery storage systems, and explore selected electricity sector effects. To this end, we develop an open-source electricity sector model that explicitly features prosumage agents and apply it to German 2030 scenarios. Results show that lower feed-in tariffs substantially reduce investments in residential photovoltaics, yet optimal battery sizing and self-generation are relatively robust. With increasing fixed parts of retail tariffs and, accordingly, lower volumetric retail rates for grid consumption, households have lower incentives for self-consumption. As a consequence, optimal battery capacities and self-generation are smaller, and households contribute more to non-energy power sector costs. A cap on hourly feed-in by households may relieve distribution grid stress without compromising PV expansion or prosumage models for households. When choosing tariff designs, policy makers should not aim to (dis-)incentivize prosumage as such, but balance effects on renewable capacity expansion and system cost contribution.

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  • Günther, Claudia & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects," Energy Policy, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521000379
    DOI: 10.1016/j.enpol.2021.112168
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    3. Aniello, Gianmarco & Bertsch, Valentin, 2023. "Shaping the energy transition in the residential sector: Regulatory incentives for aligning household and system perspectives," Applied Energy, Elsevier, vol. 333(C).
    4. Gao, Hongjun & Zhao, Yinbo & He, Shuaijia & Liu, Junyong, 2023. "Demand response management of community integrated energy system: A multi-energy retail package perspective," Applied Energy, Elsevier, vol. 330(PA).
    5. Steffen Karalus & Benedikt Köpfer & Philipp Guthke & Sven Killinger & Elke Lorenz, 2023. "Analysing Grid-Level Effects of Photovoltaic Self-Consumption Using a Stochastic Bottom-up Model of Prosumer Systems," Energies, MDPI, vol. 16(7), pages 1-19, March.
    6. Stöckl, Fabian & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Optimal supply chains and power sector benefits of green hydrogen," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 11.
    7. Pena-Bello, Alejandro & Junod, Robin & Ballif, Christophe & Wyrsch, Nicolas, 2023. "Balancing DSO interests and PV system economics with alternative tariffs," Energy Policy, Elsevier, vol. 183(C).
    8. Arnold, Fabian & Jeddi, Samir & Sitzmann, Amelie, 2022. "How prices guide investment decisions under net purchasing — An empirical analysis on the impact of network tariffs on residential PV," Energy Economics, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Prosumage; Retail tariff; Feed-in tariff; Photovoltaics; Battery storage; Renewable energy;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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